ECommerce: Expanding Into International Markets
It seems like a logical step for eCommerce retailers to open their virtual doors to customers in other countries. But before you expand your online business into international markets, let’s look at some key considerations.
The UK’s 228,000 online retailers export more than the rest of Europe’s e-retailers put together, and a growing trend amongst new omnichannel retailers is to internationalise early in the business’ development. The opportunities for eCommerce retailers are huge as online sales, especially mobile payments, show impressive growth around the world. Worldwide online sales increased by 20% in 2014. Even though the US, China, UK, Japan and Germany dominate the 2015 Global Retail E-Commerce Index, there’s also great potential in other regions such as Mexico with a 58.6% potential for growth.
Mexico and Latin America is just one of the regions the UK Trade and Investment have highlighted as a priority region for supporting UK retailers to expand into, with the UK Retail Industry: International Action Plan. This plan focuses on helping omnichannel retailers access international markets, providing financial assistance and government support.
The Benefits Of Expanding Into International Markets
It may see pointless to outline the benefits of international expansion, after all new markets must equate to growth and increased sales. However, there are some key factors that may make it even more attractive to certain businesses.
Here in the UK, competition for customer’s pound is fierce, some would say that the retail market is saturated. Therefore overseas expansion to new markets is a logical step, and does not have to come with a bricks and mortar footprint.
Similarly, some retailers may find that there is more demand for their products overseas. Take for example the UK luxury goods sector that is seeing growth in India, China, Japan and Latin America, offsetting the more sluggish growth being seen at home.
How To Expand Into International Markets
Although there are barriers to selling overseas, today with the eCommerce market it really hasn’t been easier. However, just translating your website and accepting different currencies is not a guarantee of success. First, you should do some market research.
Ascertaining a demand for your product is one element, so too is ensuring that you can price it competitively and make a profit – factoring in the costs of shipping abroad, currency conversions and other charges.
Marketing your product overseas may not be a case of simply replicating your UK communications. Localisation is a key factor in the success of businesses looking to expand internationally. This involves not only translating your marketing materials (website, social media channels, online advertising, print etc.) into your market’s native language, but also ensuring that they are sympathetic to the country’s culture. Tone of voice, imagery, colours, humour (or lack of it), and terminology are all factors that need to be addressed. Employing a local marketer to look at your existing communications and advise you will ensure you get it right.
Taking payments is an important part of the customer journey that you will want to run seamlessly. A payment system that is fully localised allowing overseas customers to pay in their own currency, with transparent shipping costs and the option for your customers to prepay guaranteed duties and taxes, will not only reduce abandoned shopping baskets, but also encourage repeat custom. Naturally all communications such as confirmation emails should be delivered in their native language.
If have chosen to price your products in another currency, such as euros or dollars, there is a risk that changes in exchange rates will impact adversely on these prices if not checked regularly. An automated currency convertor that uses the current exchange rate will help avoid these problems.
Taking card payments is straightforward as the card payment provider, or payment gateway provider, sorts out the exchange so you receive sterling into your account, although a local currency charge will show on the customer’s statement.
You should charge VAT to EU consumers (if your goods are VATable) but non-EU customers, including the US, don’t get charged this tax. However if you are selling digital services in the EU you need to be aware of the VAT MOSS scheme. For further details on this and whether your business needs to register visit the GOV.UK page.
If you plan to take direct debit payments in euros from EU countries you will also need to be aware of changes to EU legislation coming into force next year. From 31st October 2016 all UK businesses collecting Euro-denominated payments (here and overseas) will be required to migrate to the SEPA Direct Debit Scheme. More information about this scheme can be found in this blog post.
Shipping abroad is also an easy process with international carriers offering their services at competitive rates. Many payment gateway providers offer automated courier services, making the process even easier.
To find out about Secure Trading’s International logistics and shipping services visit this page.
It’s also an exciting time to be expanding into international markets. Many UK retailers are talking the opportunity to grow their online businesses both at home and abroad. Will you?